Reminder: 👉 2021: The Year DeFi Meets CeFi

Monday, January 4rd, 2021
Your Weekly Update On All Things Crypto

OVERVIEW
  • 2021: The Year CeFi & DeFi Meet
  • US House Democrat fights for Office to "coordinate" Federal Use of Blockchain.
  • PAXOS Raises $142 Million in Series C
  • Bitcoin Goes Parabolic, Reaching $34,000
  • Alt-Coin Season approaching?
  • Picks of the Week: Uniswap & AAVE
SPECIAL STORY
2021: The Year CeFi & DeFi Meet
The crypto bull run will be lead in large part by two narratives in 2021.

  1. Bitcoin - As gold 2.0 and a hedge on the global monetary system
  2. DeFi - The growth of decentralized finance

Decentralized Finance is a subsection of the crypto industry that focuses on decentralizing the products and services offered by centralized financial institutions. This spans from borrowing and lending to earning interest, to insurance, mortgages, and more. The difference is that these applications can provide much higher rates of interest (8-12%) on your crypto capital, as opposed to the near-zero rates throughout most of the centralized financial world. When banks lend your money out, they keep the interest for themselves, when you lock your funds in Defi applications, you own the interest that it accrues.

The path of DeFi and CeFi are on an inevitable collision course in 2021. DeFi applications are getting increasingly user friendly, and pose a growing threat to the traditional financial system. Centralized banks are looking for ways to capitalize on this technology while retaining some semblance of control over the financial industry.

DeFi still has a long path ahead, before it gets adopted by the mainstream population. "A lack of comprehensive and effective security auditing in DeFi has led to millions of dollars worth lost from hacks, which, seen through the lens of the world outside of crypto, where the CeFi–DeFi distinction is blurred, damages the reputation of the entire space." Better auditing and security measures will need to be adopted before DeFi can fully integrate with the CeFi world. DeFi applications will also need to become substantially more user-friendly before they can become adopted by retail investors. They are currently too technically complex for the average investor to understand and use.

While the integration of DeFi with CeFi will not happen overnight, we can be sure that these two financial sectors are on a collision course. With DeFi already seeing a more than 28x increase in value locked in 2020, this year will surely be an exciting one for the leaders in the DeFi space.
TOP STORIES
Democrat House Rep. Seeks to Create Office to Coordinate Federal Blockchain Use
A new bill was filed last week that seeks to create an office in charge of coordinating federal blockchain usage. Sponsored by the Darren Soto, Dem. A representative from the 9th district of Florida. The bill, H.R.9067, was referred to the House Committee on Energy and Commerce.

Darran Soto has become increasingly vocal about the benefits of blockchain technology and now serves as the co-chairman of the Blockchain Caucus. Soto explained, "Creating an office as described by H.R.9067 would presumably lead to faster adoption and implementation of such technologies."

For those of us reading this newsletter, we already know the immense benefits that blockchain technology can present for governments. From voting systems and governance to identity and medical records, to taxes and fiscal policy, blockchain-based systems can improve accuracy, remove the need for trust, and provide criteria information that will lead to more sound decision making.

It seems that this bill will also help create the office that would likely spearhead the rollout of a Central Bank Digital Currency (CBDC) in the United States, a roadmap that has already begun being implemented around the world. CBDC's, built on centralized blockchains will provide the Federal government an unprecedented amount of control over the monetary/fiscal policy system. They will be able to air-drop funds into the bank accounts of their citizens. They will be able to create different interest rates depending on what sector of the economy you service. They will also be able to directly track your spending and determine income tax returns based on your spending and income.

Overall, the adoption of blockchain in any form is a step forward for governments around the world, and this bill is the latest step towards reaching that goal.
ACQUISITIONS & FUNDING
PAXOS Raises $142 Million in Series C
Paxos, the first regulated blockchain infrastructure platform, announced it had raised $142 million in a series C investment round on December 16th. This brings Paxos total funding to over $240 million to-date. Declaration Partners was the lead investor with Mithril Capital and Paypal Ventures as some of the notable new.

Since its inception, Paxos' mission hasn't changed; it is to enable the movement of any asset, at any time, in a trustworthy manner. In order to get there, states Paxos, they need to help facilitate movement toward a more open, digital economy. The investment will support the companies fast growth and ability to maintain a leading position as a prominent provider of blockchain and cryptocurrency infrastructure solutions for some of the largest enterprises and financial institutions around the globe - such as; PayPal, Credit Suisse, Societe General and Revolut.

More specifically, Paxos is building the "most effective, high-volume infrastructure that allows trillions of dollars worth of assets and billions of customers to become part o the digital ecosystem." They plan to double the size of their team, expand current product solutions while building new one's that enterprises need. Paxos also makes one thing for certain: "We’ll do this all while remaining 100% committed to regulation, reliability and security."

To summarize their goals moving into the new year, Paxos has highlighted 3 key objectives to measure their progress:

  1. Grow their tokenized assets under custody
  2. Grow their team (+100)
  3. Grow their trustworthiness

With all this being said, Paxos looks to have their 2021 set on course for a good year. The team at CryptoWeekly is excited to watch Paxos chart a future and will keep all you readers updated.
CRYPTO UPDATES
Bitcoin Goes Parabolic, Reaching $34,000
The price of Bitcoin has gone absolutely parabolic over the past three weeks. Rallying 85% percent in just three weeks, Bitcoin has taken over the spotlight and has caused even institutional investors to start "FOMOing" into the market at an increasing pace. It is important that we note that these types of price movements cannot be sustained forever without a correction. At the time of writing, we are sitting 295% above the 200-week moving average of $8,190. It is not likely that we would pull back that far in a bull market, but it shows why a 30% correction down to $25K wouldn't be out of the question.

All-in-all it tends to be a bad idea to bet against Bitcoin in the midst of the bull market, because time and time again, Bitcoin has proven its ability to rally higher and longer than most people think possible.

The chart shows just how parabolic the last few weeks. Each candle in the chart represents a one-week time frame on a linear graph.
Which of the following would you prefer we cover in the following section?
Alt-Coin Dominance Chart
Bitcoin Dominance Chart
ETH/BTC Chart
Alt-Coins Bounce-Off Critical Support: Alt-Season Approaching?
Alt-coin dominance has slumped over the past few weeks for a few reasons. Institutional money is entering the market and most of it is just staying in Bitcoin. Also, fear of regulation steaming from the Ripple lawsuit has driven much of the XRP market-cap to flow into Bitcoin. However, it seems alt-coins have bounced off a critical resistance line that has been forming since January of 2018. Alt-coins may have found rock bottom and will be looking to build value vs Bitcoin in the coming months. Also with Ethereum quickly approaching all-time highs, attention may start to shift to the big movers in the alt-coin space.

You can check out the trading-view here.
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TRADES OF THE WEEK
AAVE (AAVE)
AAVE, formerly known as Ether Lend (LEND) is one of the leading lending protocols in DeFi. It is widely considered one of the "Blue Chip" protocols in DeFi. Avve protocol exploded last year, growing over 3,700% in 2020 alone. There is currently over $2.3 billion in value locked on the Aave protocol, 2nd only to Maker DAO. AAve is currently 66% down from its all-time high vs. Bitcoin. When Ethereum hits all-time highs and focus starts to shift to the alt-coin market, expect Aave to be a leader in the DeFi market.

See the trading-view here.
Uniswap (UNI)
When looking for big movers in DeFi, we also must look to decentralized exchanges for large opportunities as trading volume increases. Uniswap is the largest decentralized exchange by market cap, and by value-locked. It currently has over $2.1 billion in liquidity locked on the platform, over 50% more than its nearest competitor, SushiSwap.

The UNI governance token will give holders governance rights over the protocol, meaning it could eventually lead to holders owning a portion of the revenue that comes from the trading fees on the platform. Uniswap has broken out of its descending wedge on the daily chart and has made support on the upper range, turning resistance into support. This is a coin to watch as attention begins to shift again to DeFi.
CRYPTO JOBS
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None of the content or opinions expressed in this newsletter should be consider financial advice. We highly recommend that you do your own research before investing in any project within or outside the cryptocurrency space.

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